Not L1s or Wallets – Who Generates the Bulk of Crypto’s $20B in Revenue?

On-chain Fees:- Crypto’s money has moved – but not where many expect. A new industry analysis finds that in 2025 roughly $20 billion of on-chain fee revenue flowed through the ecosystem, and it isn’t blockchains or wallets that captures the largest share.

Instead, the lion’s share landed with application-layer finance: decentralized exchanges, perpetuals, derivatives and other DeFi platforms.

The 2025 Onchain Revenue Report released by 1kx aggregates fee data across more than 1,000 protocols. It shows on-chain fees are rapidly maturing into a sustainable revenue base. The report considers On-chain fees as the most direct indicator of real market demand with 1kx’s founding partner Lasse Clausen calling it “the best indicator of repeatable utility that users and firms are willing to pay for.”

Accordingly, users paid $9.7 billion in fees in the first half of 2025 alone – up 41% YoY). This is expected to reach $32+ billion by 2026 as application growth accelerates.

Who Generates Most of the Money in Crypto

DeFi/Finance now dominates. According to the report, roughly 63% of on-chain fees in 2025 were generated by DeFi and trading platforms. This a dramatic shift from 2021 when L1 blockchains accounted for the majority of fee income.

In H1 2025, DeFi/Finance fees surged 113% YoY to about $6.1 billion. This has been powered by explosive growth in DEXs, perpetuals and derivatives – categories that benefited from new entrants such as Hyperliquid and higher trading volumes.

Projects such as Meteora and Hyperliquid posted rapid fee growth, while legacy DEXs like Uniswap lost share as traders and liquidity moved to faster, lower-cost venues and new chains (notably Solana) saw rising activity.

Consumer-facing launchpads and platforms such as Pump.fun also generated outsized fee income by monetizing high-velocity memecoin issuance — a profitable, if volatile, corner of the market.

Why Blockchains No Longer Dominate in Crypto’s Revenue?

The report points to a structural change: blockchain efficiency. Average transaction costs have plunged. This has been driven by scaling upgrades, L2 rollups and protocol improvements — meaning blockchains themselves no longer hoard the fee pool.

As fees per transaction fell (the report cites declines in the 80–90% range compared with 2021 peaks), applications built on them could scale profitably. The result: application activity expanded 126% YoY, unlocking new fee streams that flow to protocols rather than base layers.

Yet the findings contain a paradox: while applications are taking fee share, L1s still dominate market capitalization. The top blockchains account for the bulk of aggregate market value, creating a disconnect between where fees are earned and where valuation sits. The report notes dramatic differences in price-to-fee ratios – L1s trade at far higher multiples than DeFi applications, reflecting investor bets on long-term settlement value rather than near-term fee capture.

The top 20 protocols now capture roughly 70% of fee income, but leadership changes rapidly – up to a quarter of the top 20 turns over each quarter. That dynamic lets newcomers scale fast: 71 protocols now post more than $100 million in annualized on-chain revenue, and dozens reached those thresholds within a year of launch.

However, as expected, in terms of Offchain fees that stand at $23.5B, CEX revenues hold the largest share.

The Next Profit Centres of Crypto?

Tokenization (RWAs), DePIN (decentralized physical infrastructure), wallets and consumer apps showed triple-digit growth, and the report highlights these as the most promising sources of future fee expansion.

📊 1kx's report reveals crypto's on-chain economy hit $20 billion. $DeFi protocols dominate with 63% of fees, but wallets surged 260% YoY, consumer apps 200%, and DePIN exploded 400%. Real demand is accelerating fast.#CryptoMarket #Bitcoin

— CryptoInsightPro (@VictorB39400) October 30, 2025

Tokenized RWAs remain the smallest fee-generating sub-sector in DeFi but are growing explosively. The report reveals that on-chain RWA value has more than doubled YoY – 235% CAGR over four years. As projetcs like Telegram, PancakeSwap, BNB Chain, Kraken penetrated deeper into RWAs, Q3 on-chain RWA fees rose 50x YoY.

The second emerging sector remains DePINs which though nascent but is scaling fast: YoY fees increased ~5x driven by projects such as Aethir and IO.net. Despite a Q3 slowdown for a few players, sector momentum persists — the WEF projects DePIN could reach ~$3.5T by 2028.

Wallets and trading interfaces monetize directly from user swaps and UX-led services: Phantom captured meaningful fee share following Solana’s surge, Coinbase Wallet has reported $5–15M monthly since Dec-24, while MetaMask ceded share.

Thus, as crypto businesses continue to scale, these are the sectors that are going to share the H2 2025. Crypto’s revenue story is now shifting from speculative fee spikes to recurring, application-level monetization.